Photon Energy comments on the decision by the Czech government to introduce retroactive taxation of PV plants
21-10-2010
The Management board of Photon Energy has registered the announcement of the decision of the Czech government on 20 October 2010 to propose a law introducing a 26% withholding tax on the revenues on the basis of the feed-in-tariff system generated by photovoltaic plants connected to the power grid in 2009 and 2010 effective 1 January 2011. The Czech government has also decided to increase the annual levies charged for the extraction of land from the agricultural land fund on which photovoltaic plants have been built. Both measures form part of an effort by the Czech government to limit the increase in electricity prices for 2011 to 5.5% for both households and commercial users. The Czech energy regulator (ERÚ) previously published a projection indicating an electricity price inflation of 12-15% due to the increased surcharge to cover the feed-in-tariffs for electricity from renewable energy sources based on an estimated 1,600 MWp of photovoltaic plants connected per year-end 2010.
The Czech government also proposed to introduce a 25% gift tax on CO2 certificates awarded by the Czech government to Czech electricity and heat producers free of charge in the years 2010-12 in return for pledges of investments into CO2-reducing technology upgrades. These government decisions still have to pass the entire legislative process of the Czech Republic and require approval by both chambers of parliament and must be signed into law by the president of the Czech Republic.
Management's view, which is equally shared by several legal opinions, is that if these measures were passed into law they would undisputedly represent retroactive steps leading to a material worsening of the financial returns for investors in photovoltaic assets in the Czech Republic and thus violate basic principles of Czech and European law as well as international treaties.
While management understands and appreciates the Czech government's effort to keep electricity price inflation at an acceptable level, it views the proposed measures as unlawful and to have the potential of exposing the Czech Republic to a wide array of risks ranging from a flood of law suits and arbitration proceedings by international investors, a negative impact on the image of the Czech Republic as an investor-friendly destination for foreign direct investments and ultimately downgrades by rating agencies.
Management reiterates its trust in the rule of law in the Czech Republic, a European Union member state, and therefore remains confident that the Czech government will re-evaluate its concept which includes these proposed retroactive measures.
In the case that any retroactive acts against photovoltaic power plants installed and connected before year-end 2010 are passed into law, Photon Energy's management will implement all legally available measures to protect shareholders' interests and safeguard the value of the company's photovoltaic investments in the Czech Republic based on the Renewables Energy Act as valid at the time of their grid connection. To this end Photon Energy will seek all available protection afforded under Czech and International law.
Going forward Photon Energy's management will comment on all confirmed material developments in this matter as they emerge.
Legal basis: § 3 ust.2 point 1 of the Appendix 3 to Resolution No. 733/2009 of the Warsaw Stock Exchange Management Board dated 18 December 2009 “Current and Periodical Information in the Alternative Trading System"
The Czech government also proposed to introduce a 25% gift tax on CO2 certificates awarded by the Czech government to Czech electricity and heat producers free of charge in the years 2010-12 in return for pledges of investments into CO2-reducing technology upgrades. These government decisions still have to pass the entire legislative process of the Czech Republic and require approval by both chambers of parliament and must be signed into law by the president of the Czech Republic.
Management's view, which is equally shared by several legal opinions, is that if these measures were passed into law they would undisputedly represent retroactive steps leading to a material worsening of the financial returns for investors in photovoltaic assets in the Czech Republic and thus violate basic principles of Czech and European law as well as international treaties.
While management understands and appreciates the Czech government's effort to keep electricity price inflation at an acceptable level, it views the proposed measures as unlawful and to have the potential of exposing the Czech Republic to a wide array of risks ranging from a flood of law suits and arbitration proceedings by international investors, a negative impact on the image of the Czech Republic as an investor-friendly destination for foreign direct investments and ultimately downgrades by rating agencies.
Management reiterates its trust in the rule of law in the Czech Republic, a European Union member state, and therefore remains confident that the Czech government will re-evaluate its concept which includes these proposed retroactive measures.
In the case that any retroactive acts against photovoltaic power plants installed and connected before year-end 2010 are passed into law, Photon Energy's management will implement all legally available measures to protect shareholders' interests and safeguard the value of the company's photovoltaic investments in the Czech Republic based on the Renewables Energy Act as valid at the time of their grid connection. To this end Photon Energy will seek all available protection afforded under Czech and International law.
Going forward Photon Energy's management will comment on all confirmed material developments in this matter as they emerge.
Legal basis: § 3 ust.2 point 1 of the Appendix 3 to Resolution No. 733/2009 of the Warsaw Stock Exchange Management Board dated 18 December 2009 “Current and Periodical Information in the Alternative Trading System"
